About 1.2 crore Indians started using digital wallets and mobile payments surged to its highest ever reach at 70% in the week, following the withdrawal of Rs 500 & Rs 1,000 notesSagar Malviya&Richa Maheshwari | ET Bureau | November 25, 2016, 10:25 IST

Demonetisation has delivered a windfall for digital wallet companies and modern trade, while neighbourhood kirana stores are among the worst affected, says a report by market researcher Nielsen.

About 1.2 crore Indians started using digital wallets and mobile payments surged to its highest ever reach at 70% in the week, following the withdrawal of Rs 500 and Rs 1,000 notes, said a Nielsen report on the impact of the demonetisation a fortnight ago.

During the same period, modern trade grew five times even as two-thirds of kirana stores had a hard time buying stocks from consumer goods distributors and 70% of neighbourhood groceries reported a fall in their business.

"With uncertainty over availability of cash during the November-December period, or whether the local grocer would be willing or able to transact in cash, modern trade shoppers took the opportunity to stock up. What aided sales were promotions and discounts offered by retailers," said Prasun Basu, president (South Asia), Nielsen.

He said the move towards digital payment will be positive for ecommerce companies although they "may initially face a setback" because of their "heavy dependence on cash on delivery".

Modern trade, which grew 4.4% during the year to November 13, saw its sales growth rise five times to 21% for the week from November 7-13, the Nielsen report said.

Within supermarkets, foods saw the highest increase in growth at 19% with tea, packaged atta, rice, milk food and non-refined oil contributing the most. Sales of packaged grocery grew 44%, while cooking medium grew 25%. Modern retailers also reported a growth in impulse categories such as biscuits, chocolates, salty snacks and confectionery, although at a much slower pace.

"Overall as an industry , discretionary sales are down but at our stores, sales are up as usage of debit and credit cards have touched 80% and most brands are working closely with us so we can manage the situation jointly," said Devendra Chawla, president (food and FMCG) , the country's leading retailer Future Group.